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Scenario-Based Satisficing in Saving: A Theoretical and Experimental Analysis

Author

Listed:
  • Werner Gueth

    () (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)

  • M. Vittoria Levati

    () (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)

  • Matteo Ploner

    () (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany; University of Trento, Italy)

Abstract

Contrary to the models of deterministic life cycle saving, we take it for granted that uncertainty of one's future is the essential problem of saving decisions. However, unlike the stochastic life cycle models, we capture this crucial uncertainty by a non-Bayesian scenario-based satisï¬ cing approach. Decision makers ï¬ rst form aspirations for a few relevant scenarios, and then search for saving plans satisï¬ cing these aspirations. In addition to formally specifying scenario-based satisï¬ cing in saving, we explore it experimentally. The results conï¬ rm that optimal intertemporal allocations are diffcult to derive, and suggest that satisï¬ cing allocations can be reached easily when aspirations are incentivized.

Suggested Citation

  • Werner Gueth & M. Vittoria Levati & Matteo Ploner, 2007. "Scenario-Based Satisficing in Saving: A Theoretical and Experimental Analysis," Jena Economic Research Papers 2007-049, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2007-049
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    Cited by:

    1. Werner Güth, 2009. "Optimal gelaufen, einfach zufrieden oder unüberlegt gehandelt? Zur Theorie (un)eingeschränkt rationalen Entscheidens," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(s1), pages 75-100, May.

    More about this item

    Keywords

    Intertemporal allocation decisions; Bayesian updating; Satisï¬ cing behavior;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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